Kenya Tourism: Kenya is promoting domestic tourism this year in an attempt to counter balance the fall in international arrivals

Kenya Tourism Report Q4 2009 - a new market research report on http://www.companiesandmarkets.com

Online PR News – 25-February-2010 – – For the tourism industry in Kenya, 2008 can only be described as having been disastrous. It began with the unexpected violence following the disputed 2007 elections. While no tourist areas were involved and no tourists were injured, most governments posted negative travel advice and inbound tourism collapsed. Kenya's Tourism Minister Najib Balala was quoted on 17 August as saying that tourism is recovering from the post-election crisis at the start of 2008. ‘Following successful marketing campaigns in Europe and Asia among other continents, tourism has now bounced back as tourist arrivals are on the increase Balala said.

The depth of the post election crisis in 2008 can be appreciated from the fact that despite the global economic downturn, 2009 still appears as a year of recovery.Like many countries around the world, Kenya is promoting domestic tourism this year in an attempt to counter balance the fall in international arrivals. There are of course limitations to this strategy. Firstly, while international tourists are drawn to the inland game parks, domestic tourism (plus tourism from neighbouring African countries) is focused on the Indian Ocean beach areas centred on Mombasa.

A local newspaper, The National, reported that the coastal areas were packed during a recent holiday weekend, but noted that the holidaymakers were almost all Kenyan. Secondly, internal holidaymakers do not spend at the same level as Western tourists and, of course, they do not generate foreign exchange earnings.Political Risk Prime Minister Raila Odinga has claimed that there are no splits in the coalition government's cabinet regarding the way in which to deal with the alleged perpetrators of post-election violence. In mid-July, he said that 'it is a matter of extensive and intensive consultations, and I am sure the cabinet will reach an agreement' when asked about the prospects for setting up a local tribunal to try the suspects. However, the establishment of a local court would likely be unpopular, politically. According to a poll conducted by Steadman, 68% of Kenyans want violence perpetrators to be tried at the ICC.

Economic Risk - Kenya is set to experience relatively favourable growth in a global context, with our real GDP growth forecasts for 2009 and 2010 standing at 2.5% and 3.9% respectively, followed by trend growth around 4.6% annually over 2011-2013. Latest data suggest that the East African nation is weathering the global recession relatively well, auguring for robust economic activity over the coming quarters. Indeed, Kenya has outperformed our expectations, giving us reason to revise upward our growth forecasts from 1.1% and 3.4% previously, for 2009 and 2010 respectively.Headline inflation in Kenya fell to 17.8% year-on-year (y-o-y) in June from 19.5% y-o-y in May. A spokesperson for the National Bureau of Statistics attributed the decline to 'a continued fall in the prices of cabbages, potatoes and other seasonal food items'.

According to the data, prices of food and nonalcoholic drink declined by 2.6% month-on-month (m-o-m) in June. Underlying inflation, which excludes food items, also trended down falling to 5.8% y-o-y in June from 7.0% in May. We expect headline inflation to continue declining over the remainder of the year, hitting 12.0% y-o-y by end-09.

Business Environment - Kenya is East Africa's most developed country. Prior to the post-election crisis of December 2007, the nation enjoyed swift economic growth and a high level of political stability. Kenya attracts business thanks to its reasonably good airport facilities, flexible labour regulations and investment laws, which allow foreign investors to receive the same treatment as local investors. However, there are weaknesses in the business environment, most notably a high level of corruption, which can make it difficult for both local business and foreign firms to operate in a transparent fashion.